Khaled Mohamed Balama, governor of the Central Bank of the UAE (CBUAE), and Caroline Abel, governor of the Central Bank of Seychelles (CBS), signed two Memoranda of Understanding in Abu Dhabi. These agreements focused on enhancing the use of local currencies for settling cross-border financial and commercial transactions, as well as interlinking payment and messaging systems between the two countries.
Promoting local currency use in cross-border transactions
The first MoU aims to establish a framework to promote the use of the UAE dirham and the Seychellois rupee in settling bilateral commercial transactions. This includes developing the exchange market, facilitating bilateral trade and direct investment, remittance settlement, and financial market development. The agreement outlines several elements to enable the settlement of commercial transactions in the two local currencies, in accordance with the laws and regulations of each country.
Interlinking payment and messaging systems
Under the second MoU, the CBUAE and CBS will consolidate cooperation and mutual benefit from the services of instant payment platforms, electronic switches, and messaging systems. This involves directly linking the Instant Payments Platform (IPP) that the CBUAE is developing within its Financial Infrastructure Transformation Program, and the similar platform in Seychelles. Additionally, the central banks will explore the possibility of linking their messaging systems and collaborating on FinTech and Central Bank Digital Currencies.
Enhancing economic and commercial partnerships
Commenting on the occasion, Balama stated that the MoU signing reflects the CBUAE’s commitment to expanding its relations with regional and international counterparts to enhance the UAE’s economic and commercial partnerships globally. He explained that the use of the two countries’ currencies for cross-border transactions will contribute to reducing costs and saving time in settling transactions, while also developing the foreign exchange market in the UAE dirham and the Seychellois rupee.
Read more: CBUAE’s foreign assets surge 2.55 percent to $204.27 billion in April 2024
Facilitating trade and financial transactions
Moreover, Abel underscored the importance of an effective and efficient financial system to facilitate trade for small open island economies like Seychelles. She stated that the MoUs, guided by relevant laws to safeguard the soundness and integrity of the respective financial systems, can assist in this endeavor. Abel also noted that the agreement to promote the use of the UAE Dirhams and the Seychelles Rupees in cross-border transactions can further facilitate trade relations between stakeholders across the two jurisdictions. She further added that the opportunity to collaborate on interlinking payment and messaging systems will facilitate the processing and settlement of cross-border financial transactions between the UAE and Seychelles, as the Central Bank of Seychelles continues to modernize and develop the Seychelles national payment system in line with the government’s digital economy agenda.
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